UN Report Backs Pacific Proposal for Shipping Emissions Levy

Pacific governments are championing a levy on all shipping emissions, supported by a UN report indicating it as a fairer, cheaper, and more effective solution compared to other green options under consideration. The report, published by the International Maritime Organization (IMO), suggests that a levy would cause less economic harm than cleaner fuel standards and could help reduce global inequality if designed to redistribute revenues to poorer nations.

Support and Opposition

Marshall Islands’ shipping negotiator, Albon Ishoda, emphasized that a direct emissions levy is the “fastest, cheapest and most equitable way” to decarbonize the shipping sector, which accounts for 3% of global greenhouse gas emissions. However, the proposal faces opposition from countries like Brazil, Argentina, and China, which argue that the levy could harm their trade-dependent economies and question the report’s findings on its economic impact.

Alternative Proposals

Governments are exploring various methods to price shipping emissions, with most nations leaning towards a fuel standard that imposes costs only on emissions above a certain level. This approach would incentivize the use of cleaner fuels or fuel-saving measures like slower sailing. Some countries, particularly in the Pacific and Europe, propose combining this standard with a levy, where shipowners pay based on their total annual emissions.

Economic Impact and Redistribution

The UN Trade and Development (UNCTAD) report highlighted that any emissions reduction measures would slightly impact the global economy, with a levy potentially causing less damage in the long term than a fuel standard alone. A high emissions levy, if paired with revenue redistribution to poorer nations, could even benefit the economies of least developed countries (LDCs) and small island developing states (SIDs), though concerns remain about its regressive impacts on poorer countries and families.

Future Discussions and Challenges

The debate over the best approach to decarbonize shipping will continue at the next IMO talks in London, with governments aiming to implement a measure by 2027. Balancing environmental benefits with social equity remains a critical challenge, as policymakers consider the complexities and potential unintended consequences of a global emissions levy.